Most of the major players in mortgage securitization support some of the new disclosures floated by the Securities and Exchange Commission in its revised shelf eligibility proposed rule – with a number of key changes and clarifications. Reflecting the investor’s perspective, the Asset Management Group of the Securities Industry and Financial Markets Association again “enthusiastically supported” the SEC’s proposal to mandate standardized disclosure at the asset level, believing that all of the asset-level data fields should be mandatory. “Well functioning markets require the disclosure of as much relevant asset-level data as...

Continued stress in the prime non-agency MBS sector, rising delinquencies and the use of a new loan-level loss model have prompted Fitch Ratings to revise loss expectations for more than 40 percent of non-agency pools backed by prime mortgage loans. A recent review of 1,154 rated transactions backed by prime collateral, consisting of approximately 15,000 bonds, caused Fitch to affirm or upgrade an estimated 58 percent of the prime non-agency MBS portfolio and to downgrade the remaining 42 percent, according to a report by the rating agency. At least 60 percent of the downgraded MBS were rated...

“Is a 30-year FRM always the best option for consumers?” asked Sen. Richard Shelby at a hearing held by the Senate Banking, Housing and Urban Affairs Committee this week. The Alabama Republican was raising an issue that lies at the foundation of any new mortgage finance system the government may try to cook up. The 30-year FRM, a staple in the U.S. housing market for generations, has come to rely on the separation of credit risk and interest rate risk that results from a government-backed mortgage securitization system. “Securitization by Fannie and Freddie make them possible,” said John Fenton, president and CEO of Affinity Federal Credit Union. “Without...

The lower loan limits instituted this month for conforming mortgages opened a number of regional opportunities for non-agency lenders. As of Oct. 1, 250 counties have lower government-sponsored enterprise loan limits compared with the conforming loan limits of 2010, according to an analysis by affiliated publication Inside Mortgage Finance. Michael Fratantoni, vice president of single-family research and policy development at the Mortgage Bankers Association, said the portion of the market newly eligible only for non-agency financing is significant in comparison to the amount of non-agency jumbo originations in recent years. ... [includes one data chart]

Smaller issuers of Ginnie Mae mortgage-backed securities will find it easier to pledge mortgage servicing rights (MSRs) to obtain warehouse financing and better compete with their larger rivals, thanks to changes announced recently by Ginnie Mae. Changes to the “Acknowledgment Agreement” will make it simpler for Ginnie Mae to honor servicing pledges and allow the transfer of related servicing rights. They also clarify and limit the conditions under which Ginnie Mae can deny an issuer’s request to transfer servicing to the issuer’s creditor. Under the previous 2007 procedures, an issuer seeking Ginnie Mae’s approval to pledge its rights to servicing income as a security for a loan from a private lender must ...

Long-term investor involvement is the industry’s best bet and “only realistic alternative” to boost housing demand and allow government housing agencies to meaningfully discharge their backlog of real estate owned properties, according to a report by Amherst Securities Group. However, Amherst notes that private investors will require more financing options and better access to bulk portfolios of homes, perhaps through a government program, in order to absorb and convert dormant distressed properties into active, income-producing rentals. “The massive housing market overhang is a clear danger to the U.S. economy – it creates...

The Federal Housing Finance Agency needs to explain why it hired expensive outside counsel instead of dispatching government lawyers in its massive litigation against the nation’s big financial institutions, as well as just how much the agency expects to recoup from the effort, according to a senior Republican congressman.

Small and mid-sized lenders participating in the Ginnie Mae mortgage-backed securities program may gain more financing flexibility – and a more competitive footing against the giants in the market – as the agency makes it easier to pledge mortgage servicing rights. Ginnie this week announced a revised Acknowledgement Agreement that will make it simpler for the agency to honor servicing pledges and permit the transfer of MSRs. Until now, Ginnie servicers that need cash to honor their servicing advance responsibilities have not been able to put their MSRs up as collateral for financing, explained Ted Tozer, president of Ginnie Mae, in...

Servicers face increased costs to meet new loss mitigation requirements. However, servicers at the Mortgage Bankers Association’s annual conference this week in Chicago said they have accepted the costs as a trade-off for decreased liability. “We focus on profitability, but you still have to do quality,” said Kent Lemon, a senior vice president at Saxon Mortgage Services. He said the servicer constantly works on quality assurance. Saxon uses targeted performance monitoring of employees for the Servicemembers' Civil Relief Act, fair servicing standards and other loan modification guidelines. Lemon said the servicer also...

A scathing criticism of the way the Federal Housing Finance Agency and Freddie Mac handled a $1.35 billion settlement with Bank of America could cause the regulator and the government-sponsored enterprises to tighten repurchase enforcement – and consequently inflate the buyback problem, according to litigation experts. Speaking on a recent webinar hosted by Inside Mortgage Finance, experts said a report by the FHFA’s Office of the Inspector General which found flaws in the BofA settlement approval process, could push the GSEs and their regulator to lean harder on major lenders to repurchase “bad loans.” This, in turn, could...